Rental properties can be a profitable venture for business owners. In fact, according to a study by the National Association of Realtors, rental property income accounted for 31 percent of all U.S. households’ revenue in 2016. And that number is only expected to grow in the years to come.
There are a few reasons why rental properties are such a lucrative investment. For one, they offer stability and security. With people always needing a place to live, rental properties are in high demand and tend to appreciate value over time. Additionally, they offer tax benefits that other investments don’t, such as depreciation and tax-free income through 1031 exchanges.
However, a rental property business will not be the passive income source you’re looking for if you’re not adequately prepared. Here are a few services you need to do to make your rental property business passive.
Getting a Lawyer
You’ll want to consult with a lawyer before you do anything else. There are a lot of laws and regulations surrounding rental properties that you need to be aware of, and a lawyer can help you navigate them. Additionally, a lawyer can help you set up LLCs or other business entities to protect your assets if something goes wrong with the property.
Chasing the legal paperwork yourself can be a headache, and it’s essential to ensure everything is done correctly.
Finding a Property Manager
If you don’t want to deal with the day-to-day management of your rental property, you’ll need to find a property manager. A good property manager will handle all the little details of keeping a property running smoothly, such as finding and screening tenants, collecting rent, dealing with repairs and maintenance issues, and handling evictions.
Property managers typically charge a percentage of the monthly rent for their services, so this is an expense you’ll need to factor into your budget. However, it’s worth it if it means not having to deal with the hassles of being a landlord.
Hiring a Cleaning Service
Another expense you’ll need to factor in is hiring a professional cleaning service to clean the property between tenants. This is important for two reasons. First, it will help you attract high-quality tenants looking for a clean and well-maintained property. Second, it will protect your investment by preventing wear and tear on the property that can lead to costly repairs down the road.
Doing it yourself will be impossible, especially when you have other properties to manage. And, even if you could do it, it’s not worth your time and energy when you can hire someone else to do it for you.
You can try to clean the property yourself or have your tenants do it, but most people don’t want the hassle or responsibility of cleaning someone else’s home. Therefore, it’s best to bite the bullet and hire a professional cleaning service.
Seeking Residential Strata Management
Residential strata management is a service that helps business owners who own multiple rental properties in different locations. If you have several properties in other cities or states, keeping track of everything and ensuring that each property gets managed correctly can be difficult.
A residential strata manager will take care of your details, such as finding and screening tenants, collecting rent, dealing with repairs and maintenance issues, handling evictions, and more. This frees up your time to focus on other aspects of your life or business.
While this service has a cost, it’s worth it if you want to make your rental property business passive.
Avoid Rowdy Tenants
Of course, no matter how well you prepare, there’s always the possibility of something going wrong with a tenant. That’s why it’s important to screen tenants carefully to avoid problems down the road.
Look for tenants with a steady income, good credit, and no criminal history. A security deposit and regular property inspections are required to ensure everything is in order.
If you encounter a rowdy tenant, you can consult a lawyer to determine your legal options and protect your investment. There will be times when you have to evict a tenant, and it’s best to know your rights and have a plan in place before it happens.
By taking these precautions, you can minimize the chances of having rowdy or troublesome tenants.
Making Your Rental Property Business Passive
There’s no magic formula for making your rental property business passive. However, taking the necessary steps and precautions can set you up for success. By getting a
As you can see, there are a few services you need to do to make your rental property business passive. While it requires some upfront work and investment, the rewards can be significant. If you’re looking for a stable and profitable investment, rental properties are a good option. Just be sure to research and prepare yourself adequately before getting started.